Q: Nifty ended with weekly gains of 1.6%, closing decisively above the 25,000 mark, thanks to Friday surge. Can it sustain this level unlike in the previous instances?
Markets have displayed strong resilience and a bullish momentum in the past week, with the benchmark indices closing strongly in the green. Overall, the rally has been broad-based with positive gains witnessed in midcap and smallcap as well, clearly indicating investor interest. And all this, despite the rising geo-political tensions in the Middle East. Further the India VIX, too continues to trade within a comfortable band of 14-16, further cementing the comfort of the investor community. But given the latest developments of USA directly entering into the war with Iran, and bombing its key nuclear facilities, could have graver ramifications as
Iran threatens to block the Strait of Hormuz, which accounts for almost 20% of the daily world crude oil consumption. This could lead to a further spike in crude oil prices, and we could witness volatile trading sessions this week. Investors need to brace themselves for increased volatility, while at the same time, stay cautious.
Q: What are key levels for Nifty and Bank Nifty, this week?
Overall, Nifty has been in a consolidation mode, for the past few weeks, with strong support seen around the 24,400-24,600 zone whereas immediate resistance on the upside is seen around the 25,200-25,400 zone. Bank Nifty on the other hand, has displayed a stronger move as compared to Nifty, on the back of a sharp rally in Financials. Bank Nifty has crucial support around the 55,200-55,400 zone whereas resistance is seen around the 56,700-57,000 zones.
Q: IT stocks have been in action this week and with Accenture beating third quarter revenue estimates, is it time to go hammer & tongs on the tech stocks?
Most of the IT stocks witnessed positive moves last week, with gains ranging from 1%-3% WoW, with the exception of TCS, LtMindTree & Oracle which ended marginally in the red.
The benchmark Nifty IT Index is up 4.5% MoM, indicating that overall investor interest remains strong in this sector. However, it would be prudent to go slow and steady in the sector, given the mixed economic trends emerging from the USA, which accounts for a major chunk of the IT business of Indian IT companies.Q: In case you are recommending IT stocks, where will your money go – Tier-1 stocks or tier-2 and which will be these bets?
A limited exposure should be maintained in the IT sector, given the headwinds in the industry, while at the same time, the emerging opportunities emerging in this sector, offers scope for capital appreciation. But primarily, the gainers will be those who shall be able to leverage the emerging technologies and service their clients most competitively. Hence, an ideal mix of a Tier1 & a Tier2 stock can be looked at from a long-term investment perspective.Q: While the FII trends in June have been negative so far, the financial services sector has returned with a bang with FII buying to the tune of Rs 4,685 crore in the first fortnight of June. Energy sector is another major recipient at Rs 1,200 crore. How are you viewing this development?
Overall, the financial sector has performed exceedingly well in the current quarter, and with the recent RBI rate cut of 50 basis points and a 100-basis cut in CRR, spread over 4 tranches starting September till November, is likely to infuse Rs.2.5 trillion into the banking system by year end.
All this clearly indicates, that going forward, that credit growth shall be a key theme. Given such optimism in this sector, it is very likely that FIIs have begun buying into the sector, and this sector could see solid double digit growth in coming years. As far as the energy sector is concerned, there are too many variables at play, both in the domestic and global scenario, hence it would be advisable to adopt a cautious approach.
However, renewables space is something that can be looked at from a long-term perspective.
Q: Midcaps and smallcaps have continued to outperform largecaps over the last one month with double-digit returns at the index level versus Nifty 1.7% Nifty. Is this exuberance or are stock picking in your assessment?
Midcaps and smallcaps have indeed delivered superior returns over the past month, as compared to large caps, on the back of the expectations that many stocks in these categories are likely to report better financial numbers in the coming quarters. Earlier, during the sharp correction post September, many of these stocks had witnessed significant erosion in value, which led investors to dump these stocks. But over the past couple of months, interest in back in these two categories, but it has become more stock and sector specific.
Companies strong on fundamentals shall continue to do well, and it would be prudent to stay invested in the leaders in these two categories.
Q: There were some big winners this week like Swiggy, Aditya Birla Capital and BEML while Hindustan Zinc, Concord Biotech and Adani Power were among the worst losers. What should investors do with them along with Raymond post the carving out of the realty business?
The market witnessed a sharp rally last week, and few stocks such as Swiggy, Aditya Birla Capital and BEML gained almost 10%, 8% and 8% respectively WoW. Investors can look at holding these stocks from a long-term perspective, as they all are leaders in their respective categories.
But those having a short-term view, can look at booking part profit and hold the balance. On the other hand, stocks such as Hindustan Zinc, Concord Biotech and Adani Power, corrected by almost 15%, 13% and 7% respectively WoW. Investors can hold their positions, with crucial support seen at 410, 1700 and 480 levels respectively.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
